The idea of transferring your loan to someone else may sound like an alluring alternative but it’s not a very straightforward process or even possible in some cases. For those who need options when it comes to paying off their existing car loan, here are some things you need to know:
Can you transfer a car loan to someone else?
Generally, you can’t transfer an existing car loan under your name to someone else. Most loans have a clause stating that the borrower is the only one responsible for repaying the loan debt.
Lenders are often cautious about whom they provide loans to and to stringent credit and finance checks on any potential borrower. It’s important to note that lenders are obligated by responsible lending laws to ensure that a borrower has the means to pay off their loan. It is unlikely that provide a loan to someone they don’t think can pay it back. Because of this, most lenders aren’t open to the idea of a third-party taking over your loan on your behalf.
Although it is technically possible for another person to assume your car loan repayments, very few lenders allow it. If you’re struggling with your car loan repayments, it may be best to explore other options like car loan refinance.
Can you swap one car finance to another vehicle?
When you sign a car loan contract, you’re agreeing to use the funds of the loans to buy a specific vehicle. Once that purchase is complete, your loan is explicitly tied to the vehicle you bought using the funds provided by the lender. Therefore, you can’t simply transfer your existing car loan to another vehicle.
If your car loan isn’t paid off but you want to buy a new car, a trade-in or private sale may be worth considering. Make sure to check your car’s value to see if it can cover the remaining cost of your car loan before buying a new vehicle.
Can you sell a car that’s still under finance?
Usually, lenders will let you put your car up for sale while under finance. However, it’s in the conditions that you pay off the remaining balance using the funds from the sale. If the proceeds from the sale don’t cover the entirety of the debt, you can use some of your savings to repay the balance.
Remember, you can’t transfer the remaining car loan term to the buyer of the vehicle. You’re still the only one responsible for paying off the remaining debt.
What should you do when selling a car that’s under finance?
You need to talk about your intention to sell your car with your lender. They’ll discuss your options with you and let you know what you’re allowed to do according to the terms of your car loan. If you continue with the car sale, you need to talk about the process of settling the remainder of your loan with the lender.
Ask your lender about the latest payout figure and compare that amount with the estimated resale value of your car. This will help you know if the potential sale proceeds are enough to cover the remaining loan balance.
To successfully settle your loan, you’ll have to pay off the balance and additional fees such as early termination fees and exit fees. Once your car loan is settled, you can transfer ownership to the buyer.
Looking for car finance options?
From secured car loans to car loan refinance, our expert brokers are here to help you find the ideal finance solution! Get in touch with us today by calling 1300 889 669 or arrange a call and we’ll get back to you as soon as possible.